500 people a day, with $2 average profit dollars each is 1000 a day less cost of goods and operating expenses just doesn't seem all that attractive to me. I would almost guess that 500 is a lot for some of the mom and pops. But yeah, a Starbucks on Main street america is busy all day long. If you can tap in to the demand with a good product in the right place, I could see it being a nice, predictable revenue stream. Like having a liquor store or a tobacco shop. -Prey on the addicted :)
Let's do the numbers. A pound of coffee is, call it $6 wholesale. From that pound of coffee you can make 256 cups of coffee - while understanding that a grande is two and a venti is three. So call them shots and figure most shops sell doubles. That's 128 servings at, call it, $3 per serving. Your expenses on the beans are in the noise. How 'bout the pastries? Let's say you sell scones for $2. Your baker is likely selling them to you for $15 for 2 dozen. You're at 50% profit on shit you didn't even make. How 'bout the labor? Say you've got 2 baristas. They're making minimum wage - and tips. Tips aren't your problem. So you're into it for $20 an hour including all the FICA and shit. Rent? Let's say you've got 500 square feet. Let's say you're in a major city but not in a hot spot. You're paying $1000 a month, round numbers. You're open 6am to 10pm, 7 days a week. You're paying basically $2 an hour for your rent. Your overhead is less than $22 an hour, beyotch. And your profit on your main product is essentially 100%. If you sell 8 lattes at $3 every hour you're profitable. Averaged out over the day, that's a latte every 7 minutes. And yeah, there's a lot of slop in the equation and you likely won't sell as many at 4pm as you do at 8am but you're damn skippy you're making your rent if you're halfway clued in.
$1000 a month? For commercial space in a major market even off the beaten path is a stretch. But the point if your numbers isn't lost on me. From where I'm sitting there are better investments. But a chain of shops, then selling franchising rights? Now I'm interested.
It's not. My wife was looking at commercial space a year ago. Some were cheaper, some were more. That's in urban LA, on major shopping streets. Back when I was mixing in clubs our flagship was 9,000 square feet in the heart of Pioneer Square. It cost $15k a month.
For many of these small, independent business owners, if they can cover their fixed costs, materials, and labor, all while making an honest wage, they struck gold. They're pursuing a dream and are their own master. My fiancee owns a boutique, and her competition isn't really the American Apparel across the street, it's the bored, semi-retired housewife with a rich husband who loves clothes and needs something to do. It's kind of weird, but she really is competing against stores that aren't too worked up if they don't make much of a profit. For the ones that are really in for themselves, they really are happy to simply make a wage equal to what they would make in their industry in a good position working for someone else. The competitors that want much more than that are the exception to the rule a lot of times.From where I'm sitting there are better investments.